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Saturday, July 27, 2019

The Most Selective MBA Programs

HAAS AND SLOAN MAKE THE MEDAL STAND

Despite Stanford’s appeal – which includes a Mediterranean climate
and a 10-minute drive to Silicon Valley – it isn’t the only MBA program
that attracts top talent. MIT Sloan has traditionally ranked among the
top programs in terms of applications-to-seats. Over the past three
years, that ratio has jumped from 10.6 to 13.6. The quality of
candidates has risen too, with Sloan enjoying a 15 point rise in average GMATs over the past five years (with an increase in women and international students as well).

U.C.-Berkeley Haas ranks as the 3rd-most selective MBA program at
13.1 applications for a seat in the Class of 2020. The 14th-largest
full-time MBA program, Haas has experienced a point drop in
applications-to-seats over the past three years. This reflects a larger
trend, as Haas has enjoyed a healthy 1.1% increase in applications
during the same period. In other words, more applicants became aware of
the Haas brand. This increased popularity resulted in a slight decrease
in selectivity. Then again, an increase in applications doesn’t always
equate to a surge in truly committed candidates. In the past two years,
for example, Haas’ yield has fallen from 53.1% to 49.4%. Translation:
the drop was driven by tourists not devotees.

SELECTIVITY AIDED BY CLASS SIZE

Yale SOM (10.9) and Harvard Business School (10.6) round out the five
most exclusive programs, trailed closely by New York University Stern
at 10.2 – a 0.7 of a point slide in the past three years. Overall, the
top five programs share a similarity: they are all based on the coasts
near tech epicenters. Excluding Northwestern Kellogg and Rochester
Simon, the ten most selective MBA programs fit this description. Even
there, Rochester Simon defies an easy explanation. Located in
northwestern New York – a six-hour drive to the Long Island Sound – the
Simon School averaged 9.9 applications for every one of its 84 seats.
That number will only increase now that it has become STEM certified, potentially adding 36 months to an OPT work visa for international applicants.

Rochester Simon’s selectivity punches well above its ranking. The
same can be said for Arizona State’s W. P. Carey Business School.
However, the school’s 8.5-to-1 applicant-to-student ratio is part and
parcel of its admissions policy, which had given full-ride scholarship
to every accepted applicant three years (a policy that has since shifted
to providing financial aid to students). Washington University’s Olin
School, a traditional Top 20 outlier, also ranked as the 13th-most
selective MBA program. That said, the school’s 11.2-to-1 ratio in 2015
placed it in the Top 3 – ahead of MIT Sloan and Harvard Business School,
no less. That ratio has since dwindled to 8.3-to-1, thanks to a 29%
decline in applications.

UC Irvine Merage School of Business

Second-tier programs like Penn State (8.1), Florida Hough (8.0),
Maryland Smith (7.9), and U.C. Irvine Merage (7.8) also perform well
with selectivity in contrast to their ranking. That said, each of these
programs houses less than 100 students, meaning a rise in applications
produces a bigger swing in the applicant-to-student ratio than larger
programs. That’s one reason why, for example, Penn State tops Wharton
and Rutgers edges out Chicago Booth in this measure. Aside from Harvard,
scale simply undermines prestige.

Every measure has its downsides. For example, applications-to-seats
isn’t necessarily a barometer of school health. Exhibit A: Brigham Young
University’s Marriott School of Business. It attracts 2.4 applications
for every student it enrolls – the worst conversion among the Top 50 MBA
programs. That said, the school converted 131 of the 166 accepted
applicants into actual students, ranking below just Harvard and Stanford
in terms of yield. In other words, Marriott sealed the deal with 75% of
its targeted candidates – a healthy sign indeed.

Shifting class sizes also impacts selectivity…but not as much as one
might expect. When luxury companies boost inventory, they risk watering
down their distinction. That isn’t necessarily the case in graduate
business education. At Berkeley Haas, for example, the school has added
45 seats since 2015 thanks to increasing physical capacity.
Without this bump, Haas’ applicants-to-seats ratio would stand at 15.5
instead of 13.1. That’s hardly a downfall considering the extra $2.5
million dollars in annual tuition revenue the school generated without any discernible decline in student quality.

Overall, 25 of the top 50 American full-time MBA programs lost ground
over the past three years when it comes to exclusivity. This number,
however, has been influenced by 32 of these schools attracting fewer
applications during this period. What’s more, 10 programs have increased
class sizes by 10 or more students, with another 11 schools trimming
classes by the same amount.

Like any data point, selectivity is a flawed metric that doesn’t
always follow expectations. What’s more, global prestige doesn’t
necessarily equate to a local program’s deep roots with local industries
and employers – where the right alum or opportunity can fast-track any
MBA’s career. Still, prestige matters. Many people associate a personal
brand with an MBA. Earning that degree from a household name confers
credibility and latitude. The sum of thousands of acceptances and
rejections can make a program selective or exclusive. Over time, it is
the learning, experiences, and network that ultimately determines its
prestige.